CMA CGM to Return to Profit in 2010

French ocean carrier CMA CGM said Nov. 18 it expects to break even in December, ahead of recent forecasts, and return to operating profitability in 2010.

CMA CGM, which is negotiating with its banks to restructure its $5.6 billion debt, said it is ahead of its "cautious" forecasts in September thanks to cost cuts, growing cargo volume and rising freight rates on most liner routes.

"The savings plan applied throughout all segments of the group, combined with increasingly firm volumes and rates, is already producing its initial effects," the Marseille-based carrier said in a statement.

CMA CGM, the world's third largest ocean carrier, lost $515 million in the first half of 2009 on revenue of $4.8 billion.

CMA CGM said measures that had benefited its bottom line included shuttering secondary services to focus volume on the main routes and forming strategic alliances with rival carriers to improve service quality and reduce operating costs.

Chartered ships have been returned to owners, logistics and port costs have been cut and capacity aligned to demand.

The carrier said it will also save "tens of millions of dollars" in fuel bills by soon extending "super eco speed" (sailing at a reduced speed of 14 to 15 knots to preserve fuel) to all its ships by the end of the year.

Freight rates have risen on most routes, including Asia-Europe, Asia-Mediterranean and Asia-South America.

CMA CGM's Asia-Europe trade, which accounts for nearly a quarter of its total volume, returned to profitability in October and its other services are expected to break even by the end of the year.

"Thanks to its modern fleet and the drastic measures initiated in every sector of the company and with the economy showing signs of improvement, the CMA CGM group is well positioned from an operating standpoint to return to profitability in 2010," said Nicolas Sartini, senior vice president, Asia-Europe Lines.

Separately, Louis Dreyfus, the French commodity group, is said to have expressed an interest in acquiring a stake in family-owned CMA CGM as part of the carrier's refinancing.

Louis Dreyfus and its former shipping unit LDA are the only parties that have made a firm offer to participate in CMA CGM's restructuring, according to Wansquare, a French financial newsletter.

CMA CGM has set a Dec. 15 deadline for its banks to reach agreement on a debt restructuring, according to French unions.

Contact Bruce Barnard at brucebarnard47@hotmail.com.